Feeling Down About Beating Expectations

In theory, a company’s strategy should be to underpromise and overdeliver. And this earnings season, components of the S&P 500 have been doing just that. As of Feb. 10, of the 350 S&P 500 companies that have released quarterly earnings, 68% reported EPS above the Street’s estimates, according to FactSet Research Systems.

Great news, right? Not really: This is actually below the average of 73% over the previous four quarters. Market analysts are expressing concern over the trend. FactSet also points out that excluding by Apple (AAPL) and American International Group (AIG) from fourth-quarter results, the quarterly EPS growth rate drops from 5.5% to under 1%. And the S&P 500’s estimated earnings growth for the first quarter of this year has fallen from 8% last September to 0%.

There’s reason for optimism, however. With so many analysts historically missing the mark on the upcoming quarter’s earnings, S&P 500 companies could surprise the market — and one hopes by more than usual.